The Dutch home improvement market is saturated
There are 1.098 DIY-stores in the Netherlands, distributed over the whole country (see table 1). With a national average of 15.660 inhabitants per store, the market seems to be reasonably saturated. This is especially true when compared to Belgium, where there are roughly 27.600 inhabitants per DIY-store. When a market is saturated, there is a risk that the turnover of the retailers will stagnate, resulting in margins that are under pressure. One way of increasing sales in a saturated market is by means of a good (clear) positioning in the market so that the consumers know what can be bought in the store. Positioning means that the retailer tries to conquer a clear and recognizable market position in the eyes of the consumer with an attractive and distinctive store concept and a consistent (online) retail strategy. To what extent do consumers see the market positioning of the DIY-retailers?
Positioning of the construction markets
Whether the positioning is effective can be determined by looking at the number and type of customers they have. When looking at the Dutch home improvement market, it appears that Gamma is able to attract the most people to their stores. In the past 12 months 64% of consumers bought something in the Gamma stores, 59% in the stores from Praxis and 43% from Karwei. Hornbach, currently active with 14 stores, follows with 22% of the consumers.
It also seems that the positioning of the DIY-retailers has an influence on the type of consumers who buy their products here (figure 1). For example, Karwei positions itself as a decorative DIY-store and attracts relatively more female customers than the other retailers do. The consumers that buy from Karwei are also more likely to have less DIY experience. The experienced DIY’er visits Hornbach more frequently to buy his products, which is in line with the positioning of Hornbach. The same applies to Bauhaus (not included in the figure), although the share of consumers who have bought here is low. Gamma positions itself as a customer-friendly, no-nonsense retailer and attracts the widest possible audience, which is reflected in the equal share of women and men who buy their home improvement products here. It is striking, however, that Gamma attracts more young consumers with little job experience to their store more often than other retailers do. Praxis focuses with quality products at an optimal price to value ratio on consumers with decorative ambitions. The audience they attract is often a bit older and has more DIY experience when compared to the other retailers. This does not seem to be entirely consistent with their positioning.
Assessment aspects retailers
The positioning of the DIY-retailers thus seems to have an effect on the people visiting their stores. The audience is drawn to the stores because the positioning focuses on certain core aspects that are important to them. But how are these aspects then assessed by the customers? USP Marketing Consultancy has interviewed more than 1.000 consumers to give their opinion about the five major DIY-retailers in the Netherlands (Gamma, Karwei, Praxis, Formido & Hornbach) on five aspects: Accessibility of the stores, a pleasant environment to make a purchase, a fair price for the products, quality of the products and service.
The consumers think of Hornbach as the best retailer in general (see figure 2), with an average of 7.6. Praxis was given the lowest score by the consumers (7.3), although the difference with Hornbach is small. When looking at the various aspects, the relatively high rating of accessibility is striking. An important reason for this is the high number of DIY-stores in the Netherlands, which ensures that there is (almost) always a DIY-store nearby. The parking facilities also play an important role in the realization of the score. The consumers are the least happy with the price for the products. However, it should be noted that consumers always are critical about the price.
Karwei offers the best experience, Hornbach best price and product.
In addition to the overall assessment of the DIY-retailers in the Netherlands, zooming in on the different aspects per retailer provides us with a better understanding of the strong and weak points of the retailers and how well these scores match with the positioning of the retailer. For example, Karwei scores well on the aspect that is particularly important according to their positioning. Since they want to inspire the consumers in their stores, a high rating of shop experience would be vital to them. Luckily (for Karwei), they are rated with a 7.6 on shop experience, which is the highest score of all retailers. Gamma scores the highest on accessibility, which is of course important if you want to attract the broadest audience. Praxis scores relatively low on the aspects in which they should excel according to their positioning, such as price, quality and shop experience. Especially shop experience is important for the decorative handyman (or -woman) they are trying to reach.
DIY retailers are rated lower than in 2016
From the assessment of these aspects and the different demographics of the customers they attract to their stores, it appears that the (re)positioning of the retailers has entered the perception of the consumer. It is interesting to see how the perception of the (re)positioning has changed compared to 2016. It appears that retailers are generally evaluated lower than in 2016 (see figure 4). In particular, the quality of the products at Hornbach has been rated poorly compared to 2016, as well as the experience in the Hornbach shops. Praxis has been rated lower on accessibility, quality and service. Formido, whose stores will switch to Praxis stores, was rated better this year compared to 2016. If almost all retailers are rated lower than in 2016, while retailers have invested a lot to improve the service in particular (for example Hornbach who delivers products at home and the assembly service), what seems to be the cause for the lower assessment of the consumers? Presumably the cause is the fact that the consumer has raised the bar.
The demands of the consumer change
Currently the retailers are in an expectation economy: an economy driven by continuously rising consumer expectations. These rising expectations are expressed in the lower scores for the five aspects (figure 5). The rising expectations are mainly focused on quality, a positive impact on the environment, the society or the consumer himself, and the identity of the stores. The lower score of quality of the products is an indication that the retailers have not been able to keep up with the expectations of the consumer regarding the quality. In addition to quality, service has also received a lower rating, which is striking because retailers are increasingly trying to make the difference with their competitors on this aspect. A reason for the lower score could be the lack of employees who welcome you in the store and are skilled and knowledgeable enough to provide the consumer with good advice. This results in consumers’ expectations not being met and consequently in less positive evaluations.
In order to improve consumers’ perceptions and thus , it is important that consumers’ expectations are being met at least, if not exceeded. A retailer who is able to exceed the expectations today, will be able to match them in the future as the future expectations of the consumers will even be higher than they are currently.
The assessment of the aspects and the type of visitors shows that the (re) positioning of the retailers has penetrated the perception of the consumer to a certain extent. The strategies used by the retailers therefore have an effect. However, overall evaluations have declined. The question remains, of course, which retailer can give itself the strongest position and whether this retailer can keep track of consumer expectations, both in terms of physical stores and e-commerce. The next few years will tell.